FUTURE OF SUPPLY CHAIN MANAGEMENT

FUTURE OF SUPPLY CHAIN MANAGEMENTSUBMITTED TO: Prof. Chandan Tiwari

MADE BY: Shradha AhujaShresht KapurSiddhant ThapparSoumya ShankarTanya AroraSupply Chain Management: A LOOK BACKBusinesses and supply chains have become substantially more global over the last decade. Between 1995 and 2007, the number of transnational companies more than doubled and foreign subsidiaries nearly tripled.In addition to spreading geographically, supply chains now involve more companies. An ever-broader range of activities is being outsourced: between 2007 and 2010, R&D outsourcing is forecast to increase by 65 percent, and engineering services and product-design projects by more than 80 percent.9 SUPPLY CHAIN TRENDS IN FUTUREKey events in the past that have made supply chain management what it is today are likely to shape what the profession and discipline will become in the future.What trends will affect the next generation of supply chains?

1. Service chains will become more important than product chains Increasingly, discerning consumers are demanding more from pre- and post-sales service for the goods they buy.Accordingly, companies that effectively couple the pre- and post-sales service supply chain activities will emerge as the winners over their solely product-centric competitors.This message is underscored byApples CEO, Tim Cook in his recent apology to consumers in Chinafor the companys perceived failure to listen to feedback about post-sales service.2. Companies will need to fully report supply chain externalities.Corporate externalities is the impact of an organizations manufacturing and business processes on other segments of society and the need to disclose those externalities.Companies will need to do a much better job of disclosing the end-to-end impacts of their supply chains.Measuring and reporting on the effect of major supply chain transactions.The customer or consumer will begin to demand the transparency into these impacts.3. Supply chains must be designed to serve the base of the pyramid.3Companies in the consumable and durable sectors, in particular, will need to create products and associated supply chains to support the products that will cater to this market segment.To tap into this enormous potential, supply chains must go through a total utilitarian design philosophy in order to deliver sustainable bottom-line performance. Current supply chain thinking, which is largely based on a cost plus model, will need to shift to a not to exceed cost model.4. Knowledge work and workers will become global in nature.Supply Chain work deals with complex analytics, planning, procurement processing, and provision of services.This nature of the work, the need for multi-language support, and the associated local complexities of the different geographies being served will necessitate the seamless globalization of supply chain knowledge work.EXAMPLE5. SCM will have a standard certification process similar to that for CPAs.Educational programs either focus on the basics of SCM or on a specific activity such as import/export or financial analysis. A fundamental shift will occur in the normalized delivery, content served, and certifications of supply chain professionals.Many other professions like accounting and engineering require national board examinations.A similar professional credentials program will be required for supply chain professionals to normalize the knowledge base of the incoming resources.

6. Product clock speeds will determine the number and nature of the supply chains.The fast clock speed lifecycle is becoming more the norm than the exception. The days of the steady and static product catalog is past. However, companies will continue using a single supply chain approach to service all segments irrespective of the time constraints.Also, supply chain organizations will need to be aligned by product segments as well as functional segments in a matrix fashion to serve the distinct supply chain needs.

7. Micro segmentation will be key to success.A micro segment is defined as that exact part of the general buying category that triggers the purchasing decision and not the category itself.Organizations will need to know their micro segments, and their supply chains must be able to effectively service them based on the business strategy. It is always better encourage clients to adopt a B2C mindset even if your operation is predominantly B2B.8. Technology to support SCM will primarily be on tap.SaaS (software as a service) is gaining mainstream attention. IIts contend that most if not all supply chain technologies by 2020 will be delivered and consumed via this method or on tap.The user will pay for the ability to use the capability and will not have to incur the large fixed costs of ongoing maintenance, upgrades, and infrastructure expenditures that can amount to almost 25 to 30 percent of the cost of ownership.

9. Leaders will leverage social media in a closed loop feedback process.Social media data is everywhere today.Many companies do not have a systematic method to study the data and disseminate the information to the various supply chain constituencies.This is necessary to provide closed loop feedback processes that allow the company to proactively respond to the feedback.The winning companies will be able to receive, process and act on the data that is being provided to them by their constituents via social media.

OVERALL RELEVANCE OF THE 9 TRENDS

SOME MORE TRENDSOrganizations will have to rethink theirmega centre supply chain modelToday most organisations have one or, at best, two types of supply chain: urban and rural. By 2015, additional considerations will emerge, such as labour availability (in light of the increasing cost and skill gap), space availability( given the increasing demand for land), and traffic congestion. These will require multiple supply chain solutions to cater to mega and hyper cities:Automation in manufacturing and material handling, as scale makes this a sensible investment.Verticalisation (that is high-rise warehousing an distribution centres) t contain rental costs for depots and storage areasLean design, for example, using flow through distribution to manage the movement of large lot sizes across the supply chain.Cooperation with third-party logistis providers and competitors.Supply chain infrastructure will facilitate faster, multimodal and better operations1) Faster. Introduction of the Dedicated Freight Corridor could see rail speeds rise to as much as 100 kilometers per hour. Road speeds will increase too, thanks to infrastructure investment through public- private partnerships and technology advances such as electronic toll collection, and fleet modernization.2)Wider. Presently, road is the dominant transport mode, and rail has lost significant share over the past two decades. The Dedicated Freight Corridor will enable modal shift to rail, along with increased levels of containerization. Connectivity will improve further, with strong growth among third-party logistics providers and the emergence of multimodal logistics parks11 of which Indian Railways intends to develop along the Delhi-Mumbai corridor. Additionally, the last mile connectivity is expected to improve with the introduction of more efficient small vehicles. 3) Better. With rising need for consolidation, distribution and logistics will be more efficient through standardization of pallets and trucks, higher containerization, use of semi-automated material handling, improved storage facilities, and other modernization techniques. Further, the reliability of service providers is expected to improve significantly.Organizations will need to adapt to changing regulationsAdaptation in four areas will be critical:-

1)Organizations will need to develop a scenario-based supply chain planning process to optimize the benefits from changes in the fiscal landscape, as and when they are implemented.2)Supply chain flexibility and agility, especially in decision making and implementation, will be the distinctive traits of leaders in their respective industries.3) Organizations will have to incorporate sustainable supply chain practices in their long-term supply planning and network design. All supply chain partners, including suppliers, distributors, logistic service providers, and retailers, will also have to be trained adequately to adopt such practices.4)Capability building and retention will be essential, prompting organizations to improve the work environment. Safety standards and employee policies will be important as organizations become global and supply chains become more integrated.Regional footprints will pose multi-country supply chain challengesWith the rise in foreign trade, particularly with Southeast Asian and Pacific nations, organizations will have to design their footprints at a regional rather than a country level. Among the challenges inherent to a multi- country supply chain are uncertain lead times, geographic dispersion, and a larger number of potential sources of disruptionall of which make planning and execution more difficult. Other challenges include:1)Traceability across the product life cycle to minimize wastage, achieve high service levels, and ensure responsible social practices.2)Quality and policy compliance in terms of operational practices, recycling, and social and environmental guidelines.3)Risk management to minimize the impact of political unrest, natural disasters, or sudden economic downturns.4) Responsivenessgrounded in better visibility, flexible manufacturing arrangements, and agile logisticsto address the growing need for shorter product lead times.Decisions will be supported by superior visualization and analytics1)Supply chains with superior data capture and visibility will have a strong advantage. For example, they will be able to react quickly to real-time data on inventory levels at points of sale, consumer buying behaviour, and fluctuations in freight and raw material prices. Or technology solutions may analyse point-of-sale information in order to dynamically re-price products to influence purchasing behaviour; craft differentiated advertising campaigns, and tailor product development efforts to specific needs.2)Access to this data is meaningless, however, without the requisite analytical capabilities. Organizations will have to build adequate capabilities to draw meaningful conclusions from big data. And execution skills to adopt new practices and experiment with different initiatives based on these conclusions will be critical. This will be especially important as the capability to develop insights and act on them, and not technology, will be the true differentiator.3) Examples abound of organizations that have tangibly improved their supply chains through data analytics. A large pharmaceutical retailer deployed big data analytics with massively parallel processing to reduce inventories by 15 %, without impacting in-stock rates. A large Indian conglomerate usedcollaborative optimization to source across multiple manufacturing sites and brought down primary freightcosts by 8 to 10 %. And by using RFID, an Indian cement company reduced vehicle congestion by 75 % while lowering inbound and outbound transport costs by 5%.Customization across the value chain

PLAN- (1) handle more transitions (2) reduce below the skin complexity (3)shorter, frequent NPI cycle

SOURCE- (1) flexible and agile sourcing (2)use of intermediaries

MAKE- (1)mix of focussed and flexible lines (2) more changeovers (3)shelf ready packing

DELIVERY- (1) Omni-channel servicing (2) late customization(DC/POS value addition)20A bright but challenging future: conclusionIn sum, supply chain professionals will have to face "the good and the ugly" in the future. The "good" is that SCM can provide significant benefits to organizations and their customers, and a large number of employees will have to be hired to fill all types of supply chain positions. The ugly" is that it will be more difficult to plan, implement, and control supply chain operations because of various risk and uncertainty factorsThus, the future is bright, yet it is not without challenges.

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